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Even in the most supportive and loving families, this discussion can be hard. Be honest with your children about what they can expect. Be clear about the reasons behind your thinking. Talking can prevent needless mistrust, disputes, and "he said/she said" scenarios.
Keep control of the conversation, whether that's deferring a child's questions until a later time, or explaining why one sibling will receive a larger inheritance.
Write a letter of instruction. This details what to do in case of your demise or incapacitation and should include the following:
- Contact information for legal and financial counselors, your accountant, and executor
- Locations of important legal and financial documents, pre-need funeral arrangements, or health care proxies
Have a will. This is essential to ensure that your wishes will be carried out. It may be wise to see your doctor for a checkup beforehand. Medical records that verify you are "of sound mind and body" can lessen the likelihood of a will being contested. Videotape the signing to demonstrate your physical and mental fitness. Then, review the will every two years—sooner in case of a death, marriage, birth, or divorce.
Don’t surprise your kids. Tell them if you're leaving the bulk of your money to a charity or if you will give them money during your lifetime. It may affect their career or life choices.
Call a family meeting. Invite your lawyer or your financial professional to answer technical questions, such as how a trust is structured. Make it clear that your decisions are not up for a vote, and they were made through your own careful consideration. Meet with each child alone, too. Let each hear any reasons for preferential treatment from you. If your thoughts change, you can always call another meeting. If you cannot talk to your kids directly, make a video explaining your decisions. It's not ideal, but it can prevent misunderstanding.
Legacies are more than just money. Tell your heirs about the work ethic or family values that created your wealth, such as working hard, living within your means, and spending wisely.
Your job as a parent doesn't end when your children become adults. Be upfront about your final legacy so you can continue to look after them when you are gone.
© Copyright 2008 Commonwealth Financial Network
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